Is Yahoo Selling Alibaba Stake for $11 Billion? No, Says Yahoo

Yahoo (YHOO) may soon unload its 39% stake in Chinese e-commerce giant Alibaba Group for upwards of $11 billion, according to a report Wednesday by Susquehanna analyst Marianne Wolk. But within hours of the Susquehanna report, Yahoo threw cold water on the rumors.

"We are not looking to sell our stake in Alibaba at this time," a Yahoo spokeswoman said in an email.

Nonetheless, while the speculation was alive, Yahoo's shares rose as much as 4% to $14.20 a share, from its close Tuesday.

Looking over the past few months, Wolk made the prediction that Yahoo's valuable Chinese investment could fetch it between $8 billion to $11 billion. In sizing up recent events, here's what Wolk said in her report:

(1) in May, Alibaba Group CFO Joseph Tsai said Alibaba was ready to buy back its shares from Yahoo!; (2) if Yahoo! goes ahead with plans to sell advertising to Chinese companies from its Hong Kong site, it would put itself in direct competition with the Alibaba Group; to this end, Alibaba Group's John Spelich said on September 9, "If Yahoo! begins to compete with Alibaba for customers in China, we will have to re-evaluate our relationship with Yahoo" (Reuters); (3) on September 10, Alibaba Group's CEO, David Wei, is quoted saying it does not need a financial partner and that the Yahoo! partnership has little strategic value for Alibaba Group (Bloomberg); and (4) there is some speculation that the Chinese government would prefer Alibaba Group were not controlled by foreign investors such as Yahoo! and Softbank.

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Wolk goes on to site Chinese published reports that say a venture capitalist based near Alibaba's hometown indicated a sale was pending for $8 billion to $11 billion. That figure is more than the estimated market value of Yahoo's stake, which Wolk had initially pointed to as $4 billion to $11 billion.

When all the ruckus erupted over Yahoo's potential interest in mining the Chinese advertising market, Yahoo issued a statement that it maintains a 39% stake in Alibaba and that Chinese companies buying ads from its Yahoo Hong Kong network would "not affect the investment" in Alibaba.

Alibaba, along with Yahoo's other investments, account for upwards of 43% of Yahoo's net income, Wolk stated in her report. But Yahoo, of late, has been losing favor with its Asian partners.

Although a sale of its Alibaba stake would yield it a slug of cash, some investors have previously noted Yahoo should hold onto its investment and ride it to the moon -- noting that as Alibaba's share price rises, so does Yahoo's. During the past year, Yahoo's share price has largely underperformed the Nasdaq.